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Opinion Journal: A Market Message for Obama

On the Trail Columnist John Fund analyzes the impact of today's downbeat economic news on the President's re-election chances.

This transcript has been automatically generated and may not be 100% accurate.

... but what kids are sending a message to President Brock Obama that's not good news for his re-election hopes welcomed opinion Journal I've her with our of the trail columnist John Fund John thanks for being here ... two of the pieces of economic news today the ISN Institute for Supply Management logos its manufacturing report shows a new workers plunging ... we also got the ADP survey this is the private payroll company showing a ... really lackluster thirty thousand jobs in May ... all the suggesting that ... Friday's unemployment report from the government is not going to have great news maybe you'll see it as something some improvement but ... what is the political impact now of what is ... looks like ... a sluggish economy slowing down much ... will change for the last two-and-a-half years we've had nothing but stimulus from the US economy ... following the financial meltdown of two thousand ate ... up government bailouts of banks and auto companies the stimulus ... bill trillion dollars ... the enormous flood of new money from the Federal Reserve was in the money supply dramatically ... bought enormous propping up the housing market ... well obviously that stabilize things for awhile ... but I think it also greeted the conditions ... for slow growth ... in other words a return to stagflation ... because we've seen now is ... that this really didn't know well the markets to clear ... the third of all the Malinvestment the financial ... bubble created ... if you don't allow that to draw down especially in housing ... you're going to create ... the residue of Malinvestment that make it difficult for markets to clear it difficult for new ... investment ... and you watch me nor Mr. tarantula government economy that kind of uncertainty isn't good for business before you see hundreds and hundreds of billions of dollars sitting in the spotlight trucking jobs ... but people weren't about to invest in this uncertain climate ... at Stadium Malinvestment of obviously all the government spending that we can now set to continue ... to operate as intended ... when ... you get a good look at it now though you're on ... your Brock Obama you're thinking that your re-election hopes what is what is recent history tells about a president ... try to run for re-election right ... the president's try to get reelected with a nine percent unemployment or something close to the well ... for the first year for the office people generally given the benefit of doubt because they realize that the residue ... left over from its ... predecessor ... Brock Obama will now be entering his fourth years president a few months ... of ... above summer of a presidential election years when public opinion jolts about what direction the economy is taking ... now people are feeling about their personal finances ... if unemployment ... is above eight percent that is to put a danger signal ... because this modern polling has been invented in the nineteen thirties ... no incumbent president has won re-election ... if unemployment is above seven point two percent ... OK so what ... was that our worry he's gotta see some economic growth ... and often ... trade the Seri Severson jobs into a heavy watch something very like him to see the dangerous double dip drop in housing prices ... somehow reverse itself and stabilize ... because ... people are not saying that the housing relative has climbed down to about the level of two thousand and two ... and it's not going up it's going to go down in many markets but stressed that with other message from the markets this week yesterday the House voted ... against raising the federal debt limit ... without adding some spending cuts ... this is ... a really undercutting the message and Treasury Treasury Secretary Timothy Geithner has been trying ... to do it clean ... the woman increased window spending reform immediately what that's all the right ... to my house agreed with ... that right ... it certainly are saying ... that word we understand that ... this is a ... long-term purchase bidding from that needs to be fixed and ... what ... this is an opportunity you have this so these negotiations over the debt limit this is an opportunity in the present one of the season to say ... I get it ... I understand what markets need to say we're to have some spending reform they'd even if he wanted the ball was in tax relief ... Timothy Gardner is right to this extent the Treasury secretary is right ... that if you don't raise the debt limit but does send a disturbing signal to markets ... but no one really believes that that would be anything more contemporary ... art that over time the State Government take some more than enough money to the public to appeal its obligation to ... pay off ... its ... obligations to foreigners first ... but ... there's also signals Senate does pass a clean debt limit without anything addressing the long-term structural columns of this economy or the runaway entitlement programs are are soaring deficits ... and that is ... if we ... pass up this opportunity ... to signal be sent to the world of state sponsors country ... we're country that has been a stiffer hit or miss and all of Greece Follow Portugal or Ireland ... and we are going to just ... let the good times roll without knowing the consequences ... and I have to tell you ... that is the more disturbing settle for many people markets because they will start shorting the streets of medium and long term ... so the debt limit is a short-term problem for deliveries of ... not doing anything about it the conjunction with the government settlement sets a longer term problem with short sell them at the ... actually ... looking at the Pres Obama Ghana's re-election hopes ... it seems to me is ... all set of options you're older than the right option in other words ... stimulus doesn't work even if he wins he wanted to use the Guinea get another stimulus and the Scots well you know Winston Churchill paraphrasing you said the government will do the right thing but for some but it's also possible the ball all the possibilities that the stimulus ... there ... are ... some big chorus on the left saying it ... will roll out quantitative easing three from the Federal Reserve pumped out more money ... what ... does he want to be running next year when ... inflation raging twelve dollars a gallon gasoline to meet the buy and what doesn't work will be difficult to look for smaller blocks of those coming to whatever it wants ... least that's the indications ... secondly it takes awhile for inflation to build up a head of steam ... of ... politically ... of President Richard Nixon to this mirror nineteen seventies publicly president decided ... all take a little inflation the future ... in exchange for short-term fix ... Bob Carter Brendan unemployment the problem was the nineteen seventies our farmers are not nearly as severe ... unemployment was high for Weihai before to have five percent remember ... and ... inflation really was that ... it didn't take awhile to catch up so ... Nixon won that bet I don't think Obama ... would win that have ... bought anything keep my ... nose for your size you sure government will exhaust all the bad possibilities before they have relationship they have to repeat several about possibility several times before the exhaustive ... is that ... he's got to embrace of either the expects or regulatory relief because he has no other option that he wants to relax ... well the answer is maybe ... remember ... the tea Fire becomes this conclusion about six months ... of others not very much thinking dreaming big once the economy dramatically at that point ... so he may decide ... you know this is something I really don't believe them ... of ... I don't I don't agree with that I wanted to do something with different ... all roll the dice and see if my charm and my IIa ... it looks cool sure reminds me through a second term ... so I can promise you will he reach that conclusion in time ... for boulevards sake even if this doesn't work ... will it work in time for her election Coca well the weekend but the springs eternal pledge of ... good thanks for being OpEd yes that's all